A N N U a L R E P O

CIVIL AVIATION ADMINISTRATION FINLAND

ANNUAL REPORT 94 CONTENTS 2 REPORT OF THE DIRECTOR GENERAL

5 CAA´S BUSINESS IDEA

5 CAA´S LINE OF ACTIVITIES AND PRIMARY TASKS

6 HIGHLIGHTS

7 REPORT OF THE BOARD

7 SERVICE, OPERATIONAL AND PROFIT TARGETS 8 DEMAND FOR AIR TRANSPORT 13 DEVELOPMENT OF AVIATION SERVICES AND BUSINESS ACTIVITIES 13 Passenger Services 15 Air Navigation Services 16 Manoeuvring Area and Ground Traffic Services 17 INTERNATIONAL AVIATION POLICY 18 ENVIRONMENTAL ISSUES 18 PERSONNEL 19 PRODUCTIVITY 23 ECONOMIC RESULT 23 Pricing Policy 23 Economic Result 25 Investments 25 Financing 27 Income Statement 28 Balance Sheet 29 Financing Statement 30 Basis for Financial Statement 34 Proposal on the Use of the Profit 35 Audit Report

37 REGULATORY FUNCTIONS

37 IMPACTS OF EU MEMBERSHIP Editor Irmeli Paavola 37 AVIATION REGULATIONS Text Matti Koskivaara Lay-out and graphic design Päivi Vainionpää 37 REGULATORY CONTROL Drawings Risto Eskelinen 37 RENEWAL OF AVIATION ACT Photograph Pietari Vanhala English text Anna Lauttamus-Kauppila 38 FLIGHT SAFETY REPORT OF THE DIRECTOR GENERAL

Finally, after three difficult years of deep economic recession, gross production in Finland showed a marked upturn of 4 per cent last year. The volume of gross production was, nevertheless, 8 per cent lower than in the period preceding the recession. Since the development of gross national production and that of air transport go hand in hand, also the volume of air traffic enjoyed a considerable boost last year. The Economy of Scales principle plays a significant role in the operation and maintenance of the large number of small airports and the air navigation system of Finland: the positive development of air transport stabilised the economy of the Civil Aviation Administration in the desired way. Following the favourable development of Finn- ish national economy, the number of air passengers began to grow in a distinct way in July 1994, resulting in a 5 per cent annual growth at the end of the year. Commercial air traffic operations rose by 1 per cent. It seems that the trend will continue in 1995 with an 8-9 per cent annual increase. Such a positive development requires, however, undisturbed growth of the Finnish national economy as the development of the different sectors of air transport is closely linked to that of the country’s economy. Demand for international air traffic services rose by 8.5 per cent and for domestic traffic by 2 per cent. International business travel in general as well as holiday tours from central Europe to Finland showed particularly strong increase while leisure travel from Finland grew very little. The trends of these three sectors of air transport illustrate the duality of the Finnish economic development in a pertinent way: the competitiveness of the export industry and the demand for export products will remain on a high level whereas demand in the Finnish home market and the investment flow are quite modest. In addition, the household sector in Finland is still rather depressed although gradually reviving.

2 In 1994, as a consequence of the increased de- raising the service level of our main airport, Helsin- mand for air transport services as well as of certain ki-Vantaa. The investment level of the CAA is still rationalization measures, the economic develop- quite high and the improvement programme, which ment of the CAA could be stabilised and even turned consciously takes advantage of the low building slightly profitable. When the 1994 economic result costs, will be continued for the next two years at is calculated on the same principle as that of 1993 least. More and more of new type of investments, (FIM -1.3 million) the comparable result for last year e.g commercial services well-suited to airport envi- is FIM +30 million. This clearly exceeds the profit ronment, have been added to the programme. For target of FIM 1 million set by the Council of State. instance, the middle terminal under construction at The positive economic result enabled the CAA to Helsinki-Vantaa Airport will be financed with prof- take account of holiday-pay liabilities in full as well its from the new commercial services and hence as extra depreciation of obsolete property during there will be no pressure on raising air traffic charg- the latest property inventory. After these accounting es on account of the investment. Simultaneously, arrangements, employed in 1994 only, and with the venture will markedly improve the basic servic- profits from the sale of property, the economic re- es offered to air carriers and passengers. sults of the CAA Group and the CAA show a profit of The focus of the CAA investment programme FIM 18.5 million and FIM 22.9 million respectively. will lie, also in the coming years, on the develop- This result may be regarded as satisfactory, at any ment of Helsinki-Vantaa Airport as well as on the rate, especially when taking into consideration that improvement of the air navigation system. An ultra- the level of air traffic charges is, on average, lower modern ATM system, which conforms to European in Finland than in the other Nordic countries or the air navigation policy, is being built in order to har- rest of Europe. Furthermore, at our small airports monise the numerous air navigation systems in use the advantages to be gained from the Economy of today. The new system will be operational in Fin- Scales principle are essentially more modest than in land in the beginning of 1997. Helsinki-Vantaa Air- many other countries. port middle terminal with flexible domestic-inter- The turnover of the CAA grew by 7 per cent out national transfers and a greater variety of commer- of which a raise in rents, fees and charges account- cial facilities will be completed in June 1996. In ed for 4 per cent. The running costs increased, with- addition, the commencement of the second phase out taking account of the above mentioned balanc- of the terminal complex, destined for serving intra- ing arrangements, by 4.4 per cent. Since the appar- EU traffic, is being considered seriously. As EU-traf- ently notable rise in the operating costs can be ex- fic composes the most significant part, nearly 70 plained partly by the holiday-pay cuts in 1993 and per cent, of Finland’s international air traffic also in partly by the new unemployment insurance fee in- the years to come, its smooth and unrestricted han- troduced in 1994, the volume of expenditure grew, dling will prove a major competition factor to our in actual fact, hardly at all. Due to our investment country. On the other hand, encouraging the ex- programme depreciation measures increased some- pansion of intercontinental gateway traffic, which what. will also gain from well-thought-out terminal ar- The financial position of the CAA remained rangements, is another key element in the Finnish good in 1994. Investments which totalled nearly air traffic strategy. FIM 193 million could almost entirely be funded The CAA’s principal task is to maintain, operate with own income. During 1994, the CAA invest- and develop the Finnish airport network. The CAA ment programme was deliberately slowed down in has been functioning as a State Enterprise for four order that the investment peak in 1995 could be years now. During this time 12 Finnish airports, out carried out in full. The greatest effort was put into of a total of 21 offering scheduled services, have

3 undergone modernisation and expansion and an- are now free from restrictions in the EAA countries other three are currently being upgraded. At the for airlines meeting the agreed technical and eco- moment, there are only two CAA airports in press- nomic requirements. Now that our national econo- ing need of redevelopment. In a country such as my has begun to recover, it is fair to expect that the Finland where commercial and industrial centres offer of air services will continue to become more are few and far between the airports form a uniform varied than before. infrastructure supporting the country’s regional Because of the adverse economic situation in structure. Hence it is our policy to develop the air- Finland, the 1993 CAA decision to liberalize the ports as a network also in the future. As a result of domestic market for Finnish airlines has had little the fairly modest air traffic volumes in Finland, Hel- significance in practice so far. Nevertheless, domes- sinki-Vantaa Airport is the only Finnish airport, de- tic air traffic in Finland is in need of more competi- spite the recently liberalized air traffic rights in the tion and wider diversity. Our dense network of air- domestic market, with the possibility of creating a ports allows enhancing fast passenger traffic be- significant international route network. Given the tween the most important commercial and industri- regional structure and traffic policy in Finland, the al centres in Finland without expensive investments other end of any domestic air service route is Hel- in new routes. When the marked unfairness in the sinki-Vantaa Airport almost without exception. It is competitive situation between the different modes not, however, the CAA’s intention to restrict other of transport has been corrected especially with re- kind of development, on the contrary, our tariff and gard to the pricing policy of traffic infrastructure, permit policy aim at furthering diversification of of- domestic air traffic will undoubtedly expand con- fer. siderably. Thanks to the flexibility of air traffic and the The outlook for 1995 is fairly optimistic. There is progressiveness of air traffic technology it is possi- no pressure on major raises in the air traffic charges ble to enhance long-haul traffic connections with- and, moreover, the infrastructure is in good condi- out investments in new air service routes. It is highly tion. The need to adjust the service level and to unlikely that the minor traffic volumes of Finland enhance the scope of commercial facilities at Hel- would ever offer sufficient economic grounds for sinki-Vantaa Airport will lead to a slight rise in the the heavy investments required for the construction number of employees at Helsinki-Vantaa. Never- of fast road traffic connections. It is indeed the firm theless, the growth rate of expenditure will remain opinion of the CAA that money spent on infrastruc- significantly lower than that of air traffic volumes. ture is equally valuable with money used for opera- It is the primary objective of the CAA to offer tional functions and, consequently, the CAA finds and develop for the Finnish air transport industry that the infrastructures of competing modes of trans- and air passengers safe, high-quality airport and air port should, both for economic reasons and in or- navigation services that will promote the country’s der to further regional and entrepreneurial equality, competitiveness. In order to succeed in this mission adopt the principle of income financing used in the in the best possible way, we will have to, in addition field of air transport. to improving the infrastructure, pursue a more cus- The EEA agreement, which entered into force in tomer-orientated policy, place importance on the the beginning of 1994, liberalized the competition development of service skills and attitudes of the opportunities in western Europe. Also the EEA sup- personnel and, finally, shed the last traces of gov- plementary protocol took force in July 1994, and so ernmental bureaucracy from our working methods. Finland’s EU membership in 1995 did not generate Even though many important goals have been any immediate changes in the Finnish aviation pol- reached, there is always room for improvement. icy. Opening of new international air services and opportunity of operating air services in the domestic market of another EEA country, provided that this Mikko Talvitie service is a continuation of an international flight, Director General

4 CAA’S LINE OF ACTIVITIES AND PRIMARY TASKS

The basic purpose of the CAA is to provide airport and air navigation services for the needs of civil and military aviation. The CAA maintains, operates and develops 25 airports and a nationwide air navigation system. The CAA is in charge of Finnish Aviation Policy together with the Ministry of Foreign Affairs and the Ministry of Transport and Communications. The CAA also functions as the aviation authority and is thus responsible for flight safety work in Finland. CAA’S BUSINESS IDEA

The CAA offers and develops for its customers - air traffic operators and air passengers - safe, high-quality and internationally competitive airport and air navigation services. The objective is to create, by developing airports and air navigation services, prerequisites for safe, service-orientated and profitable air transport in Finland. Our customers are air carriers, passengers, air cargo customers, the Air Force as well as other sectors of aviation. From the CAA’s point of view it is crucial that our customers obtain high- quality services which reflect besides advanced technical know-how, also our willingness to serve the air transport industry and air passengers in the optimum way. The key elements in the work of the CAA are safety, efficiency and cost-effectiveness. These are also central preconditions for profitability and competitiveness both in the domestic and international market. The work of the CAA is funded by our customers, ie., by income financing. In the end, the whole scope of CAA’s activities, including investments and the regulatory functions, is paid for by the customer.

5 HIGHLIGHTS OF 1994

1994 1993 1000 FIM 1000 FIM

Turnover 673,247 627,573 Operating costs 486,419 454,404 Operating profit 190,361 177,648 Result for the accounting period 22,867 -1,331

Investments, total 192,827 263,757 Land areas 2,413 4,828 Machinery and equipment 91,772 119,589 Airports 5,095 25,828 Buildnings 92,264 106,550 Other investments 1,283 6,562

Passenger movements,total 7,000,965 6,759,067 Domestic traffic (dep.) 2,012,837 1,976,842 International scheduled traffic (d+a) 3,984,741 3,470,348 International charter traffic (d+a) 950,899 1,080,422 International, total 4,935,640 4,550,770 Other traffic (GA) 52,488 51,455

Flights, total 347,900 370,176 Domestic traffic 59,521 59,126 International scheduled traffic 58,686 57,106 Charter traffic 7,866 8,270 Overflights 10,489 8,530 International flights, total 77,041 73,906 Other civil flights 151,081 173,992 Military flights 60,257 63,152

Personnel,total (Dec., 1994) 1,577 1,590 Airports 1,164 1,168 Air navigation services centres 101 109 Head office 246 251 Internal service units 66 62

6 REPORT OF THE BOARD

The Board members: (front row, from the left) Mr. Matti Puhakka, Direc- tor; Ms. Mona Björklund, Director; Mr. Mikko Talvitie, Director Gene- ral; (back row) Mr. Pertti Yliniemi, Director; Mr. Samuli Haapasalo, Ministerial Counsellor and Mr. Vilho Hänninen, Warehouse Keeper.

SERVICE, OPERATIONAL AND PROFIT TARGETS

The Council of State approved the following objec- • The first priority is to safeguard those airport tives as the CAA’s central service, operational and services which are vital to the operation of profit targets for 1994: scheduled air traffic.

• The airports and air navigation system shall be developed according to the demand for the • The CAA shall, within its line of activities and services. tasks, see to that all aviation operations in Finland are safe, efficient, functional and cost- • Furthermore, the Civil Aviation Administration effective. shall attempt to improve the profitability of the airports by rationalizing their operations and • The CAA shall attend to the appropiate supply by developing new sources of revenue and and development of its services in accordance forms of cooperation. with business principles. • The profit target is a balance between costs • The CAA shall take account of the needs of the and revenue. The profit target for 1994 was customers including those of military aviation FIM 1 million and the actual economic result and the society in general. for the fiscal year was FIM 22.9 million.

7 DEMAND FOR AIR TRANSPORT

Passenger Traffic

In 1994, the number of passenger movements at CAA airports grew by 6 per cent on 1993 and totalled seven million out of which five million were in international traffic and two in domestic traffic. Despite the promising trend, the amount of passenger movements was still 1.5 million less than in 1990 - the record year in the history of the CAA - and corresponded to the level of 1988. After three successive years of decline there was a distinct upturn in international air traffic with an 8 per cent growth in 1994. The forceful increase in international scheduled traffic, which had started in 1992, sustained: the nearly four million scheduled passenger movements equal a growth rate of 15 per cent on 1993. However, approx. 5 per cent of the growth can be explained by the conversion of charter flights to the Canary Islands and Mainland Spain into scheduled ones. Without this measure the amount of charter passengers would have turned positive. As it was, the number of passenger movements in charter traffic was 951 000 - 12 per cent less than in 1993. East European traffic accounted for the greatest percentual increase in international scheduled traffic in 1994. The so called gateway traffic through Helsin- ki-Vantaa Airport rose by as much as 50 per cent raising the share of international gateway passengers to 13 per cent of the total number of departing passengers. Furthermore, intercontinental traffic, still showing strong growth, answered for 13 per cent of the country’s international scheduled traffic. Intra-EU traffic forms 65 per cent of all international scheduled traffic in Finland. The most popular charter traffic destinations were Greece, the Canary Islands and Turkey. Also, the amount of charter flights from central Europe to Fin- land has continued to grow. 93 per cent of the international scheduled traffic was handled at Helsinki-Vantaa Airport. The amount of Helsinki-Vantaa’s international traffic increased by 9 per cent on 1993. The total throughput of international traffic at Turku, Pori and Vaasa Airports, all located on the west coast of Finland, increased by 50 per cent on the previous year.

8 Domestic traffic began to grow in March 1994 and the favourable trend sustained through the year except for the summer months. The increase was 2 per cent on 1993. Relatively, domestic traffic grew fastest at Vaasa Airport with a growth rate of 9 per cent. Other airports with faster than average growth rate in domestic traffic were Kittilä, Lappeenranta, Mariehamn and Kuusamo.

Amount of Aircraft Movements

The number of aircraft movements in domestic traffic rose to 60,000 which is 1 per cent more than in 1993. There were 59,000 international scheduled flights, an increase of 3 per cent on the previous year. On the other hand, international charter flights fell by 5 per cent to 8,000 flights. The greatest drop, -13 per cent, was in general aviation operations. Military aviation accounted for 60,000 aircraft movements which is 5 per cent less than the year before. The total number of operations declined by 6 per cent mainly due to the considerable fall in general aviation. Overflights through the Finnish air space increased by as much as 30 per cent. Turbo-prop traffic in Finland developed by 4 per cent to 45,000 movements which make 69 per cent of domestic scheduled traffic. The number of movements by Saab 340s and ATR 72s was approx. 17,000 for each aircraft type. Domestic operations with jet aircraft decreased by 6 per cent. Almost 84 per cent of international operations were flown with narrow-body jet aircraft: MD 80s accounted for approx. 18,000 movements and DC9s for c. 14,500 movements. The amount of international traffic flown with turbo prop aircraft went down by 31 per cent to 6,000 operations. Flights with wide-body aircraft grew by 48 per cent to 3,500 movements.

Cargo and Mail

The amount of air cargo increased considerably in 1994: the growth was 21 per cent to 80,000 tonnes out of which 92 per cent was international freight. Also, the amount of air mail developed favourably: the 1994 total of 60,000 tonnes was 6 per cent more than in 1993. Of the share of international mail the total volume was 60 per cent.

9 M O V EMENTS 1 984-1994 AIR TRANSPOR T 1984-1994

1 000 mo v e ments million passenger 4 50 9 4 00 8 3 50 7 3 00 6 2 50 5 2 00 4 1 50 3 1 00 2 5 0 1 0 0 - 83 -84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 -84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 - 1% 8% 2% 12% 13% 8% 11% - 5% -5% -7% -6% 7% 1% 22% 16% 14% 7% -10% -8% -7% 6%

D omestic air tr a nsport I nternational air tr a nsport G ener al a v iation Domestic tr affic International sceduled tr affic (dep+tr ansfer) (dep+arr+tr ansfer) M ilitary a v iation O v e rflights (EFES) International c harter tr affic (dep+arr)

D OMESTIC SCHEDULED TRAFFIC 1984-1994 I NTERN A TION AL TRAFFIC 1984-1994

m illion passengers (dep+tr ansfer) m illion passenger (dep+arr+tr ansfer) 3 6

2 ,5 5

2 4

1 ,5 3

1 2

0 ,5 1

0 0 - 84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 - 84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 4 % - 7% 2 1% 1 1% 8 % 2 % - 10% - 5% - 10% 2 % 9 % 6 % 2 3% 1 8% 1 6% 9 % - 10% - 9% - 6% 8 %

S c heduled tr affic C harter tr a ffic

DOMESTIC TRAFFIC DESTIN A TIONS 1994

Other airports 15% Helsinki V antaa 49% T ampere-Pirkkala 2% Mariehamn 2% J oensuu 3% V aasa 3% Jyväsk ylä 4% T urku 3% K uopio 4% Ro v aniemi 5% Oulu 10%

10 F REIGHT TRAFFIC 1984-1994 O VERFLIGHTS 1984-1994 T AMPERE FIR 1000 tons 1000 mo v ements 100 14 90 12 80 70 10 60 8 50 40 6 30 4 20 2 10 0 0 -84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 -84 -85 -86 -87 -88 -89 -90 -91 -92 -93 -94 6 % 3 % 8 % 7 % 7 % 2 % - 11% - 1% 8 % 1 8% 35% 43% 62% 56% 56% 50% 52% 14% -55% 30%

International tr affic Domestic tr affic

T YPE OF AIRCRAFT IN SCHEDULED DOMESTIC TRAFFIC T YPE OF AIRCRAFT IN SCHEDULED I NTERN A TION AL TRAFFIC

1 000 of mo v ements 1 000 of mo v ements 4 % 4 5 6 0 4 0 4% 5 0 3 5 3 0 4 0 2 5 - 6% 3 0 2 0 1 5 2 0 1 0 1 0 -31% 5 1 68% 48% 0 0 T u rbo-prop Narro w bo d y W ide bod y T u rbo-prop Narro w bo d y W ide bo d y

1 993 1 994 1 993 1 994

INTERN A TION AL TRAFFIC DESTIN A TIONS 1994

Others 2% T he F ar East 4% Usa+Kanada 6% Scandina via 25% Eastem Europe 12%

Southem Europe 22%

Centr al Europe 29%

11 AIRPORTS 1994 Number of passengers Number of landings Domestic International Air transport Military aviation Others Helsinki-Vantaa 1 947 831 4 593 551 53 506 1 436 7 461 Oulu 394 201 18 984 4 866 2 046 7 469 Turku 137 298 121 418 5 889 1 179 10 880 Rovaniemi 221 679 23 775 2 679 9 427 5 006 Kuopio 182 024 9 566 1 954 9 532 5 761 Vaasa 138 070 46 860 3 143 1 000 4 302 Tampere-Pirkkala 63 882 67 187 2 989 9 730 11 588 Jyväskylä 145 226 7 819 2 226 4 826 7 576 Joensuu 119 664 9 595 1 963 155 7 559 Maarianhamina 92 556 1 797 1 426 0 1 747 Ivalo 87 015 2 839 1 000 711 1 099 Kajaani 83 235 2 011 936 304 1 292 Kemi-Tornio 76 897 794 1 035 86 1 860 Kruunupyy 72 570 3 926 1 241 580 1 858 Kuusamo 61 045 164 676 32 205 Kittilä 59 704 3 719 750 608 557 Pori 48 371 19 242 2 417 161 6 731 Savonlinna 36 512 1 136 1 160 41 558 Varkaus 31 576 109 1 376 14 451 Lappeenranta 29 204 936 1 400 50 2 596 Enontekiö 2 610 10 163 17 141 Helsinki-Malmi 0 202 0 98 56 208 Kauhava 0 0 0 12 164 1 751 Utti 0 0 2 3 168 1 322 Halli 0 0 0 2 892 811

AIR NAVIGATION SERVICES CENTERS 1994 IFR-flights Overflights South Finland (Tampere) 150 000 8 236 North Finland (Rovaniemi) 29 000 2 253

12 DEVELOPMENT OF AVIATION basic services. Commercial services such as shops and restaurants are usually offered in cooperation SERVICES AND BUSINESS with other companies. ACTIVITIES

DEVELOPMENT OF PASSENGER SERVICES The CAA has three basic service products: passenger services, air navigation services and manoeuvring area services. During its four years of existence, the CAA has Passenger Services are services offered to pas- placed great emphasis on the furthering of passen- sengers and air cargo customers at passenger and ger services, for instance, by refurbishing terminal air cargo terminals and in their near vicinity. These buildings and improving ground traffic arrange- comprise of terminal facilities with the various serv- ments. ices, ground access arrangements in the airport area As many as 14 terminals at CAA airports have as well as rescue and other security arrangements. undergone expansion in the last four years. Annual- Air Navigation Services are services given to ly, the sum of FIM 150-200 million has been invest- airlines and pilots prior to and during the flight. ed in the improvement of passenger facilities. One These services include acquiring and distributing of the reasons for the high level of investment has relevant information to pilots as well as ATC servic- been the relatively low building costs brought about es to ensure the smoothness and safety of air traffic. by the economic recession in Finland. Manoeuvring Area Services are ,e.g., runways, To raise the service level of the domestic termi- taxiways, apron areas, hangars and other services nal at Helsinki-Vantaa Airport, a new multi-storey and facilities required for operation of aircraft on car park with space for more than 2000 cars was the ground. taken into use in February 1994. In addition, the The other CAA services complement the three payment system was entirely renewed and several

13 new parking-related services were introduced. expanded during 1994. The aim was to improve In spring 1994, the construction work of the first baggage handling and create more space for de- phase of Helsinki-Vantaa terminal extension, or parting passengers. The expenses totalled FIM 9 middle terminal, began. The extension, which will million. connect the two existing terminals, is due for com- The extension of Joensuu Airport, the building pletetion in June 1996. The future building complex costs of which amounted to FIM 10 million, was will house a wealth of commercial, conference and inaugurated last December. Special attention was other service facilities as well as attractive waiting paid to upgrading the facilities for international traf- and lounge areas for international passengers. fic. At the same time, the car parking area was en- Moreover, it will allow direct international - domes- larged. tic transfers between the present terminals. The floor Plans for a completely new passenger terminal area of the extension will equal that of the domestic and adjacent areas at Tampere-Pirkkala Airport were terminal. On completion, this FIM 190 million perfected in 1994. Construction of the apron and project will increase the passenger capacity of the car parking area for the future terminal was started international terminal by 20 per cent to 6 million in the summer. The terminal building, which will annual passengers. create enhanced possibilities for serving interna- The expansion of Oulu Airport terminal build- tional passengers, will be taken into use in spring ing was finished in the autumn of last year. The 1996. The project will be funded jointly by the CAA, passenger facilities of this second largest airport in the communities in the Tampere area and the Minis- Finland were trebled. The total costs were FIM 33 try of Labour. million. A noteworthy change concerning passenger The FIM 9-million terminal extension at Kittilä services took place on August 1994, when the Act Airport was completed in the summer of 1994. The on Security Control (305/94) took force. As a conse- focus was on enlarging the waiting and baggage quence, by the end of 1996 the CAA will gradually claim areas which are particularly important during assume responsibility for the airport security checks the peak tourist season. from the police. During 1994, security checks with Also Ivalo Airport in the Finnish Lapland was CAA personnel were started at Enontekiö, Rovanie-

14 mi, Kemi-Tornio, Kuusamo, Kajaani, Joensuu and mer 1994, and the new premises with a state-of- Tampere-Pirkkala Airports. the-art ATC simulator system will be taken into use in 1995. Besides basic and advanced training for the CAA’s own personnel, the ANS Institute offers DEVELOPMENT OF AIR NAVIGATION professional training for air traffic controllers world- SERVICES wide. In June 1994, the FIM 130-million crew centre The chief venture in the air navigation services sec- and office building at Helsinki-Vantaa Airport was tor is the FATMI, a comprehensive renewal of air taken into use. This impressive building located navigation equipment and system covering the close to the international terminal was constructed whole country. The project comprises the overall by the CAA’s first subsidiary, Kiinteistöosakeyhtiö reconstruction of the Air Navigation Services Cen- Lentäjäntie 1. It includes facilities for Helsinki-Van- tre for South Finland, located in Tampere, the tower taa Airport’s future approach control, AIS briefing and approach controls at Helsinki-Vantaa Airport as and meteo. However, a major part of the premises well as a nationwide data network for exchanging has been rented to Finnair. messages between air traffic control units. At the end of 1994, the construction of the new The FATMI system will be fully operational in air traffic control tower at Helsinki-Vantaa began as 1997. New premises for the Air Navigation Services a part of the building process of the middle termi- Centre for South Finland were inaugurated in spring nal. The new tower will be operational simultane- 1994. In addition to the area control, the new build- ously with the terminal extension, in summer 1996. ing contains premises for the flight rescue centre, A ground control radar was taken into opera- training simulator and facilities for software mainte- tional use at Helsinki-Vantaa Airport at the end of nance and development system as well as for the 1995. The advantages are twofold: firstly, the radar staff of the Centre and FATMI project offices. will facilitate supervision of traffic on the runways In 1994, the training prospects of air navigation and apron area and, secondly, it will help reduce services personnel were furthered considerably with delays caused by bad weather. the foundation of the new Air Navigation Services By the end of 1994, new ARWO weather obser- Institute. The expansion and renovation work of the vation stations had been installed at eight CAA air- former CAA Training Center was initiated in sum- ports.

15 DEVELOPMENT OF MANOEUVRING AREA AND GROUND SERVICES

The working methods of runway and apron maintenance were improved and the quality of the machinery was upgraded with the introduction of more efficient snow blowers and runway sweepers. Harmful environmental effects could be reduced by developing new working methods and substances for the deicing procedures of runway surface. At Vaasa Airport, the apron area adjacent to the refurbished terminal building, opened in 1993, was enlarged last summer. In 1994, the apron area at Kittilä Airport was expanded. At Tampere-Pirkkala Airport, warehouse and servicing premises for the maintenance machinery were enlarged. Renovation and expansion of manoeuvring areas took place also at Pori and Lappeenranta Air- ports.

16 INTERNATIONAL AVIATION POLICY

European Economic Area EEA thermore, negotiations were commenced with the Republic of South Africa and Vietnam. The significant new air traffic rights agreed with the United When the EEA Agreement entered into force in the States in the year before as well as the 1993 agree- beginning of 1994, commercial liberalization of air ment with the Russian Federation took effect in traffic was extended to the five EFTA countries: Fin- 1994. Consequently, a new air service between land, Sweden, Norway, Austria, and Switzerland. At Helsinki and Petrozavodsk via Joensuu was inaugu- first, the principles of the Second Liberalization rated in the spring. According to the agreement the Package, applied in the European Community dur- aviation authorities of the two countries may direct- ing 1990-1992, were implemented in Finland. For ly agree on new routes to be established. Finnish airlines the entrance into the internal market was further facilitated on July 1, 1994, when the Third Liberalization Package, in use in the European International Air Transport Union from 1993, was adopted also in the EEA countries. The traditional, strictly regulated international air Finnish airlines are now allowed to operate air transport system has proved inflexible in the rapid services between the EEA countries without tariff or liberalization development of the past few years. capacity restrictions. Also the choice of destinations The ICAO air transport conference on air traffic reg- and combination of air service routes were deregu- ulation pondered on ways for facilitating the adap- lated and, moreover, it is now possible to carry pas- tation of airlines to the changes generated by the sengers and cargo freely between two international liberalization development. Special attention was destinations within the EEA. In Finland these rights paid to problems concerning entrance into the mar- have been utilized for opening air services via Stock- ket, ensuring of sound and unbiased competition holm to Manchester, Berlin, Stuttgart, and Milan. and improvement of arbitration mechanisms in con- In addition, passengers and cargo can now be flict situations. transported without restrictions in the domestic market of another EEA country. For the time being, at least, this cabotage traffic is only possible if the ICAO 50 years air service is a continuation of an international flight originating in the home country of the airline. The air transport conference held in Montreal cul- minated in the celebration of the 50th anniversary Bilateral Air Transport Relations of ICAO on December 6, 1994. The International Civil Aviation Organization, which acts under the United Nations, was founded on December 7, 1944 During 1994, the number of bilateral air transport with the signing of the Chicago Convention on In- agreements made by Finland was exceptionally ternational Civil Aviation. With 183 member states large: agreements with India, Macau, Kazakhstan, the Chicago Convention is one of the most exten- Uzbekistan and South Korea were initialled. Fur- sively ratified international agreements in the world.

17 ENVIRONMENTAL ISSUES PERSONNEL

Night time traffic at Helsinki-Vantaa Airport was In 1994 the CAA Group employed an average of restricted in the beginning of June. With this meas- 1,611 persons and the CAA 1,610 persons (1,631 in ure the amount of nocturnal noise in the Tikkurila 1993). The number of personnel in operational jobs residential area could be reduced. The first quarter- averaged 1,569 (1,605 in 1993) and in investment ly report on the airport’s environmental impacts was projects 41 (26 in 1993). Out of the total, approx. published in October. Also a system for quick distri- 28 employees were on unpaid leave. bution of information on exceptional noise levels At the end of the year, the number of permanent caused by unfavourable weather conditions or con- employees was 1,577 - 13 persons fewer than in struction or maintenance work on the runways was 1993. Operational staff totalled 1,540 and person- developed. nel employed for investment projects 37. Studies on air traffic noise conducted at Lap- Out of the total number of CAA personnel, 1,164 peenranta, Savonlinna, and Vaasa Airports were were employed at the airports, 101 in air navigation completed. The preliminary results of the noise stud- services centres, 66 in internal profit centres and ies performed at Tampere-Pirkkala and Rovaniemi 246 in the head office. Airports were published. The wages and salaries paid to the personnel of Although air traffic emissions to the ground and the CAA Group amounted to FIM 251 million. The waters have only a minor impact on the environ- salaries and fringe benefits paid to the Company ment in general, the chemicals employed at airports Board and the Managing Director totalled FIM may have significance locally as many airports are 778,000. The wages and salaries paid to the person- situated in important ground water areas. In runway nel of the CAA added up to FIM 251 million and the deicing procedures urea, which contains nitrogen, salaries and fringe benefits of the Company Board has been replaced by non-nitrogeneous acetates. and the Managing Director totalled FIM 724,000. The use of urea has been decreased by c. 20 per cent annually the result of which has been a dra- matic 50 per cent reduction in the nitrogen load and oxygen consumption in just a few years’ time. When the runway extension of Kuusamo Air- PRODUCTIVITY port was in the process of obtaining a building permit from the Water Authorities, the CAA emphasized the positive effects that the extension would have on the environment through decreased use of After three negative years, the productivity of the deicing chemicals. CAA turned positive - the growth on 1993 was 2.4 per cent. This promising development was enhanced by the continued extra work effort of the personnel in all the sectors as well as the air traffic’s coinciding, even if slow, recovery from the depres- sion. The service production remained more or less on the same level as in the previous year even though the work effort placed on production fell by 2.5 percent.

18 A GE DISTRIBUTION OF PERSONNEL 31.12.1994

n umber of personnel PERSONNEL AT AIRPORTS AND 350

ANS-CENTERS 31.12.1994 300

250

Helsinki-Vantaa 462 200

Tampere-Pirkkala 65 150

Rovaniemi 60 100 Kuopio 57 50 Oulu 55 0 - 25 26 - 30 31 - 35 36 - 40 41 - 45 46 - 50 51 - 55 56 - 60 61 - 65 Age group Jyväskylä 55 Turku 53 M ale F emale Vaasa 42 Pori 32 Helsinki-Malmi 29 Kemi-Tornio 27 P ERSONNEL 1994 Joensuu 26 Maarianhamina 26 A ir terminal services 59 Ivalo 26 C ommunications Kruunupyy 25 e ngineering 131 G ener a l functions 387 Kajaani 21 E lectrical Lappeenranta 20 e ngineering 66 Kauhava 17 C onstruction 54 Savonlinna 16 T r affic 394 Kuusamo 11 Utti 11 M aintenance 486 Kittilä 10 Halli 9 Varkaus 5 Enontekiö 4 Etelä-Suomi (Tampere) 85 Pohjois-Suomi (Rovaniemi) 16 PERSONNEL 1994

P RODUCTIVITY 1 992 = 100 H ead office 246 1 10 H elsinki-V antaa 462 1 00 T e lecom maintenance 9 0 6 6 8 0 7 0 A NS centers 101 6 0 5 0 4 0 3 0 2 0 1 0 0 O ther airports 702 1 991 1 992 1 993 1 994 - 3,8% - 4,2% - 1,4% 2 ,4%

19 20 ORGANIZATION OF CIVIL AVIATION ADMINISTRATION

BOARD THE BOARD OF CAA 1994

Mr Mikko Talvitie, General director DIRECTOR GENERAL Mrs Mona Björklund, Managing director Mr Samuli Haapasalo, Senior Cabinet Secretary Mr Vilho Hänninen, Warehouse clerk Mr Matti Puhakka, Director HEAD OFFICE Mr Pertti Yliniemi, Managing director

HELSINKI-VANTAA TURKU VAASA JYVÄSKYLÄ KUOPIO OULU ROVANIEMI ANS CENTRE FOR SOUTH FINLAND HELSINKI-MALMI PORI KRUUNUPYY TAMPERE- JOENSUU KAJAANI KEMI-TORNIO MARIEHAMN KAUHAVA PIRKKALA LAPPEENRANTA KUUSAMO IVALO HALLI UTTI KITTILÄ SAVONLINNA ENONTEKIÖ VARKAUS ANS CENTRE FOR NOR TH FINLAND

ORGANIZATION OF HEAD OFFICE

HALLITUSBOARD

DIRECTOR GENERAL

SECRETARIAT INTERNATIONAL AFFAIRS AUDITING ECONOMIC PLANNING AND FINANCING

ADMINISTRATIVE AND AIRPORTS AIR NAVIGATION FLIGHT SAFETY FINANCE DEPARTMENT DEPARTMENT SERVICES DEPARTMENT AUTHORITY

• Administration • Airport planning • Air traffic services • Airworthiness • General services • Airport construction • System planning • Flight operations • Accounting • Airport operations • Communications and • Administrative services • Data administration electrical engineering • Personal development

Ans-institute

Telecom maintenance

21 INCOME DISTRIBUTION OF THE CAA 1994 1993 million FIM million FIM Turnover and other business activity income 676,8 629,6 Production expenses of the services -154,3 -141,8 Financing income 35,8 33,8 Other income and expenses 0,6 1,3 Amount to be distributed 558,8 100% 522,9 100%

Preliminary taxation 91,7 86,0 Social security fee 9,8 9,1 Unemployment insurance fee 11,5 0,0 Real estate tax 3,7 3,1 Other public expenditures 1,2 1,1 1. Public expenditures 117,8 23% 99,3 19% Wages 242,8 235,7 Preliminary taxation -91,7 -86,0 Contribution to pension fund 57,8 54,2 Social security fee (-9,8) (-9,1) Other personnel costs 2,9 3,4 Education 2,4 3,0 2. Personnel 214,3 41% 210,3 40% Financial costs 21,8 40,5 3. Financiers 21,8 4% 40,5 8% Fixed assets 182,1 174,3 Changes in reserves 0,0 0,0 Undivided profit 22,9 -1,5 4. Infrastructure development 204,9 39% 172,8 33%

Amount to be distributed in relation to the number of movements and passengers Number of movements 347 900 370 176 Number of passengers 7 000 965 6 759 067 Amount to be distributed (FIM) FIM per movement 1 606 1 446 FIM per passenger 80 77

22 ECONOMIC RESULT Pricing Policy

In 1994, the CAA raised the price level of aeronau- Development of National Economy tical charges slightly: the charges in domestic traffic rose by 5 per cent and in international traffic by 4 per cent. The aim of the pricing policy is to alter the The general expectations for the development of cost structure of air traffic in such a way that the the Finnish national economy for 1994 were cau- charges correspond more accurately to the produc- tious. Although the vigorous growth of exports was tion costs of the services given to air traffic. anticipated, it was widely believed that it could not As from June 1, 1994, the CAA became a VAT compensate for the weak demand in the consumer sector or the feeble investment flow of the company sector. Furthermore, neither the rapidly increasing A IR TRAFFIC CHARGES 1.7.1994 MD-83 foreign debt of the public sector nor the already implemented or planned measures for slowing A thens M adrid C F 60% = 90 P ASSENGER down the trend gave any cause for more optimistic M T O W 73 T ONS L ondon (Heathro w 1) N A V 2 * 250 KM prospects. R ome C URRENCY 1.7.1994 D ublin As mentioned before, the economic develop- S toc kholm ment of air transport industry and that of the CAA L isbon H elsinki-V a ntaa follow quite closely the trend of the country’s na- B russels C openhagen tional economy. In view of the above, the expecta- K efla v ik tions for the future were not very positive. P a ris Z uric h Nevertheless, looking back at 1994, it is clear O slo that the most pessimistic forecasts proved wrong W arso w A msterdam and that the year turned out to be better than as- F r ankfurt L ondon (Heathro w 2) sumed - a fact that the following statistics clearly V i enna show: 1 .000 mk 0 2 4 6 8 10 12 14 16 18 20

P A SSENGER LANDING E N ROUTE

1992 1993 1994(e)1 1994(r)2 tex pager on the revenues of its business activities. annual change % As a result, the pricing of CAA’s services had to be GNP -3,6 -1,6 1,0 3,9 adjusted to the new situation. From the general avi- Private consumption -4,9 -3,9 -4,0 2,0 ation’s point of view, the most significant change Private investments -19,6 -18,9 0,0 7,0 was an 18 per cent reduction in the basic prices Exports 10,0 16,7 12,0 12,5 (before VAT) for services given to private and ama- Imports +1,1 0,7 3,5 12,5 teur aviators. Domestic air traffic -5,2 -9,8 0,8 1,8 International air traffic 3,0 9,5 5,0 8,4

Economic Result 1 Estimated development of national economy, September 1993, Ministry of Finance 2 Estimated development of national economy, February 1995, Economic Result of the CAA Group Ministry of Finance The CAA has two subsidiaries, Kiinteistöosakeyhtiö Lentäjäntie 1 and Finland Airport Services Ltd. In The unexpectedly forceful increase of air traffic re- accordance with the Act on State Enterprises, the flected the surprisingly favourable development of CAA and its subsidiaries form a State Enterprise the national economy. Group. In the 1994 accounts, only Kiinteistöosake-

23 yhtiö Lentäjäntie 1 is included. Finland Airport C OMP ARISION OF THE RESUL T 1993-1994 Services Ltd. was established on July 1, 1994, and its first fiscal period will terminate on December 7 00.0 6 73,2 6 29,0 31, 1995. 6 00.0 4 86,4 The economic result of the CAA Group was FIM 5 00.0 4 54,4 18.5 million. The turnover reached FIM 677.2 mil- 4 00.0 lion and the running costs amounted to FIM 487.4 3 00.0 1 90,3 million. The investments totalled FIM 223.4 mil- 2 00.0 1 77,7 1 00.0 lion. 2 2,9 0 .0 The amount of long-term loans in 1994 was FIM T u mo v er Expences Oper a tion - 1,3 R esult p rofit before 321.3 million. d epreciation 1 993 1 994 Economic Result of the CAA

On account of the gloomy prospects for 1994 the profit target set for the CAA by the Council of State was a balance between costs and profit. The actual economic result, FIM 22.9 million, was better than expected. I NCOME 1994 The positive development can be explained by the increased demand for air traffic and for the CAA’s other business activities, the slight raise in aeronau- O ther 4% tical charges and, last but not least, the strict super- R ents 16% vision of operating costs. I nternational The turnover amounted to FIM 673 million t r affic 45% which is 7 per cent more than in 1993. O ther tr affic 6% As the most significant cost-cutting measures M ilitary tr a ffic 9% taken in 1993 (e.g. holiday-pay cuts and two-week O v erflights 3% lay-off) were not going to be employed in 1994, the expenditure was known to rise by 4 per cent. With D omestic tr affic 17% rigid cost control and by rationalizing certain functions, the growth of expenditure could be limited to 6.8 per cent. The notable increase in personnel costs was caused by a non-recurring FIM 9-million holiday-pay reserve which was entered into the books due to certain accounting arrangements. Without it EXPENSES 1994 the operating costs would have increased by only 4.9 per cent which, taking into consideration the realized inflation rate, meant that the running costs did not grow at all. The total amount of operating Depreciation expenses was FIM 486 million.

P ersonnel cost 50%

Other expenses 18%

Materials and supplies 5%

24 INVESTMENTS 1994 Investments

Mac hinery and In the State budget for 1994 the limit set for the equipment 48% CAA’s investments was FIM 400 million. The actual investments amounted to FIM 193 million in 1994.

Ground facilities The investments were divided between the different categories of fixed assets in the following way: Other in v estments 1% Land and w ater FIM million areas 1% Land and water areas 2.4 Buildings and Buildings and constructions 92.3 constructions 48% Machinery and equipment 91.8 Ground facilities 5.1 Other investments 1.2 Total 192.8

Financing

In the 1994 State budget the basic equity capital of the CAA was raised by FIM 60 million. Also, the I NVESTMENTS 1990-1994 CAA was granted the right to take on long-term M illion FIM 4 00 loans up to FIM 250 million. The actual amount of new loans in 1994 was FIM 40 million. 3 00 During the year under review, the financial position of the CAA was good. In consequence, the 2 00 net financial expenses were positive even if the un-

1 00 realized financial income, positive because of the appreciation of the Finnish markka, are not taken

0 1 990 1991 1992 1993 1994 into account. 5 1% 19% -26% -27% At the end of 1994, the CAA’s long-term loans totalled FIM 206.3 million.

25 26 INCOME STATEMENT

GROUP CAA 1.1.-31.12.1994 1.1.-31.12.1993 1.1.-31.12.1994 1.1.-31.12.1993 FIM thousand FIM thousand FIM thousand FIM thousand

TURNOVER 677,256 673,247 627,573 Other revenue from business activity 3,533 3,533 4,479

EXPENSES Materials and supplies -Purchases during fiscal year 33,988 33,988 35,918 -Decrease (+)/increase (-) in 1,785 1,785 -1,736 inventories Services bought from other companies 104,706 105,249 106,110 Personnel costs 333,807 333,728 302,439 Rents 2,777 1,858 2,891 Other costs 10,318 9,811 8,782 EXPENSES 487,381 486,419 454,404 OPERATING PROFIT BEFORE DEPRECIATION 193,408 190,361 177,648

PLANNED DEPRECIATION Buildings and constructions 42,156 40,475 35,893 Machinery and equipment 70,774 69,358 64,675 Ground facilities 67,762 67,762 70,371 Intangible rights 2,467 2,467 1,893 Other long-term expenditure 2,041 2,019 1,507 TOTAL DEPRECIATION 185,200 182,081 174,339

OPERATING PROFIT 8,208 8,280 3,309

FINANCING INCOME AND EXPENSES Interest income 17,315 16,277 20,682 Other financing income 20,964 19,517 13,140 Interest expenses -24,109 -16,509 -23,390 Other costs of borrowed capital -5,252 -5,250 -17,075 8,918 14,035 -6,643 RESULT BEFORE OTHER INCOME AND EXPENSES 17,126 22,315 -3,334

OTHER INCOME AND EXPENSES Other income 12,262 12,262 1,507 Other expenses -11,719 -11,710 -165 543 552 1,342 RESULT BEFORE RESERVES CHANGES IN RESERVES 17,669 22,867 -1,992

Decrease(+)/increase(-) in bad-debt reserve 661 Minority Share 798 PROFIT FOR THE FISCAL PERIOD 18,467 22,867 -1,331

27 BALANCE SHEET

GROUP CAA 1.1.-31.12.1994 1.1.-31.12.1993 1.1.-31.12.1994 1.1.-31.12.1993 FIM thousand tmk FIM thousand FIM thousand ASSETS FIXED ASSETS AND OTHER LONG-TERM INVESTMENTS Intangible assets Intangible rights 10,496 8,177 7,997 Other long-term expenditure 4,906 4,906 4,865 15,402 13,083 12,862 Tangible assets Land and water areas 213,912 213,912 215,503 Buildings and constructions 1,030,813 917,324 828,561 Machinery and equipment 327,407 314,528 303,289 Ground facilities 751,294 750,636 814,225 Unfinished products and advances 168,243 168,243 197,185 2,491,669 2,364,643 2,358,763 Securities and other long-term investments Stock and shares 308 22,454 22,254 FINANCING ASSETS Current assets Materials and supplies 7,782 7,782 8,841 Finished and semi-finished products 338 338 1,064 8,120 8,120 9,905 Accounts Accounts receivable 50,635 50,730 46,018 Accrued revenue and deferred payments 41,989 42,253 20,204 Other accounts 174 174 15 92,798 93,157 66,237 Financial assets and other long-term investments Other financial assets 258,075 250,840 189,847 Cash and money in bank account 8,178 7,295 1,402 266,253 258,135 191,249 2,874,550 2,759,592 2,661,270 LIABILITIES OWN CAPITAL Restricted equity capital Basic equity capital 1,042,236 1,042,236 982,236 1,042,236 1,042,236 982,236 Non-restricted own capital Other equity capital 1,262,131 1,262,131 1,262,131 Profit/loss for previous accounting periods 48,631 51,365 52,696 Profit/loss for accounting period 18,467 22,865 -1,331 1,329,229 1,336,361 1,313,496 MINORITY SHARE 6,058 RESERVES Optional reserves Transition reserves 12,827 12,827 12,827 Compulsory reserves 1,086 1,086 13,913 13,913 12,827 CURRENT LIABILITIES Long-term Loans from the State 17,031 17,031 18,923 Loans from financial institutions 304,276 189,276 198,880 321,307 206,307 217,803 Short-term Loans from the State 1,892 1,892 1,892 Loans from financial institutions 32,939 32,939 36,088 Advances 4,073 4,073 2,051 Accounts payable 39,588 39,535 30,516 Accrued expenses and deferred revenue 67,701 67,031 51,770 Other short-term loans 15,614 15,305 12,591 161,807 160,775 134,908 2,874,550 2,759,592 2,661,270

28 STATEMENT 1.1.1993 - 31.12. 1994

GROUP CAA 1.1.-31.12.1994 1993 1.1.-31.12.1994 1993 FIM thousand tmk FIM thousand tmk FINANCING SOURCES

Income financing Operating profit 193,408 190,361 177,649 Compulsory reserves increase(+)decrease(-) 1,086 1,086 Interesr revenue 17,315 16,277 20,682 Other financial income 6,949 5,501 13,051 Other income and expenses 543 552 1,341 Total 219,301 213,777 212,723

Capital Funding Loans from financial institutions 70,485 70,485 Increase in basic equity capital 60,000 60,000 83,800 Total 130,485 130,485 83,800 Total 349,786 344,262 296,523

USE OF FUNDS Profit distribution Borrowed capital interests 24,110 16,509 23,390 Other borrowed capital expenditure 4,985 4,983 10,689 Total 29,095 21,492 34,079

Investments Land and water areas 2,413 2,413 4,828 Buildings and constructions 105,930 92,264 106,550 Machinery and equipment 106,066 91,772 119,589 Ground facilities 5,095 5,095 25,828 Shares and dividends 200 200 2,014 Intangible rights 2,805 889 3,634 Other long-term expenditure 874 194 1,314 Total 223,383 192 827 263,757

Sale of fixed assets 4,366 4 366 3,023

Capital funding Loan installments to State 1,892 1,892 22,500 Loan installments to others 69,412 69,412 37,003 Total 71,304 71,304 59,503

Change in net fixed assets Cash and bank receivables 6,686 5,893 -14,064 Short-term funding capital 54,085 87,913 -76,902 Change in inventories -1,786 -1,786 1,737 Short-term borrowed capital -28,615 -29,015 31,436 30,370 63,005 -57,793 Total 349,786 344,262 296,523

29 CIVIL AVIATION ADMINISTRATIN NOTES TO THE FINANCIAL STATEMENTS

1. Consolidated financial statements

The 1994 consolidated financial statements have been drawn up in accordance with the Decision of the Council of State of 16 December 1993 (589/92) concerning the accounting principles for state enterprises and groups of state enterprises.

1994 was the first time that the consolidated financial statements were drawn up, and so no data for previous years is presented.

The Group consists of the Civil Aviation Administration, now reorganised as a state enterprise, the housing company Kiinteistöosakeyhtiö Lentäjäntie 1, and Finland. Since Airport Services LTP was established in 1994 and since its operation had little impact on the consolidated accounts and its non-restricted equity capital, it is not included in the consolidated financial statements. For more information about the companies in the Group, please see section ”Group Companies”.

Internal transactions within the Group, group receivables and group liabilities have been eliminated. Cross- ownership of shares has been eliminated using the past-equity method. Minority shares have been removed from the equity capital and shown as a separate item on the balance sheet.

2. Salaries and wages GROUP CAA Performance based 1994 1994 1993 FIM 1.000 FIM 1,000 FIM 1,000 Board of directors and managing director Salaries and remuneration 778 724 661 Fringe benefits 1 1 1 Other salaries 231,148 231,141 230,831 Holiday pay 10,927 10,923 4,548 Change in holiday pay reserves 8,900 8,900 -367 Fringe benefits 188 188 128 Total 251,942 251,877 235,802

3. Social security payments Pensions 57,833 57,830 54,239 Unemployment insurance payments 11,532 11,531 Other personnel costs 12,690 12,678 12,527 Total 82,055 82,039 66,766

In 1993, the personnel gave up holiday bonuses in exchange for time off. The holiday pay reserves for 1994 include the holiday pay accumulated since the beginning of the year (9 months), any annual leaves that remain to be taken, and additional time off due to extra hours.

The personnel is covered under general state pension schemes. The performance-based pension contribu- tions calculated on the basis of the 1994 wagebill in compliance with the principle of full coverage applied in insurance mathematics are entered in full in the income statement. The pension rate determined by the State Treasury was 23.4%.

During the financial year under review the Group employed an average of 1,611 people. The corresponding figures for the Civil Aviation Administration (CAA) were 1,610 (1,631 in 1993) of whom 1,569 (1,605 in 1993) were employed by operations and 41 (26 in 1993) by investment projects.

At the end of the financial year, the number of personnel in the employ of the Group was 1,612. At the same time, the number of permanent staff at the CAA was 1,482 (1,500 in 1993) and that of fixed-term employees 95 (90 in 1993).

30 4. Incidental income and expenditure Incidental income includes capital gains of FIM 12.1 million from the sale of land. Incidental expenditure includes depreciation on runways no longer in use to a total value of FIM 11.6 million. 5. Materials and intangible rights and depreciation Planned depreciation was calculated as straight-line depreciation or by reducing the balance of depreciation based on the economic life of fixed assets. The same method of depreciation was applied throughout the Group.

Economic life and depreciation charges were as follows: No. of years Percentage Intangible Intangible rights 5 20 % straight-line Other long-term expenditure 5 20 % straight-line

Materials Buildings and structures 20 - 40 2,5 - 5 % Tasapoisto Machinery and equipment 10 - 15 6,7 - 10 % Menoj.poisto Ground facilities 10 - 40 2,5 - 10 % Tasapoisto

GROUP CAA Changes in balance sheet items: 1994 1994 1993 FIM 1,000 Fim 1,000 FIM 1,000 Intangible rights Acquisition cost, Jan 1 12,473 12,069 8,435 + Increase during financial year 4,672 2,756 3,634 - Decrease during financial year -424 -424 Acquisition cost, Dec 31 16,721 14,401 12,069

- Accrued planned depreciation, Jan 1 -4,072 -4,072 -2,179 + Decrease in accrued planned depreciation 315 315 - Planned depreciation during financial year -2,467 -2,467 -1,893 Book value, Dec 31 10,497 8,177 7,997

Other long-term expenditure Acquisition cost, Jan 1 8,323 8,323 7,009 + Increase during financial year 2,061 2,061 1,314 - Decrease during financial year Acquisition cost, Dec 31 10,384 10,384 8,323

- Accrued planned depreciation, Jan 1 -3,458 -3,458 -1,951 + Decrease in accrued planned depreciation - Planned depreciation during financial year -2,019 -2,019 -1,507 Book value, Dec 31 4,907 4,907 4,865

Land and water areas Acquisition cost,Jan 1 215,503 215,503 205,941 + Increase during financial year 2,413 2,413 9,564 - Decrease during financial year -4,004 -4,004 -2 Acquisition cost, Dec 31 213,912 213,912 215,503

Buildings and constructions Acquisition cost, Jan 1 1,051,421 949,917 664,547 + Increase during financial year 158,010 129,307 285,370 - Decrease during financial year -27,225 -12,188 Acquisition cost, Dec 31 1,182,206 1 067,036 949,917

- Accrued planned depreciation, Jan 1 -109,962 -109,962 -85,464 + Decrease in accrued planned depreciation 725 726 - Planned depreciation during financial year -40,982 -39,302 -35,893 - Additional depreciation due to scrapping -1,174 -1,174 Book value, Dec 31 1,030,813 917,324 828,560

31 GROUP CAA 1994 1994 1993 tmk tmk tmk Machinery and equipment Acquisition cost, Jan 1 797,256 797,256 676,629 + Increase during financial year 94,736 80,442 121,378 - Decrease during financial year -25,218 -25,218 -751 Acquisition cost, Dec 31 866,774 852,480 797,256

- Accrued planned depreciation, Jan 1 -490,758 -490,758 -430,002 + Decrease in accrued planned depreciation 22,165 22,165 710 - Planned depreciation during financial year -67,564 -66,149 -64,675 - Additional depreciation due to scrapping -3 ,209 -3,209 Book value, Dec 31 327,408 314,529 303,289

Ground facilities Acquisition cost, Jan 1 1 032,262 1,032,262 965,738 + Increase during financial year 16,718 16,038 66,524 - Decrease during financial year -409 -409 Acquisition cost, Dec 31 1,048,571 1,047,891 1 032,262

- Accrued planned depreciation, Jan 1 -218,037 -218,037 -147,667 + Decrease in accrued planned depreciation 167 167 - Planned depreciation during financial year -67,783 -67,762 -70,371 - Depreciation on runways -11,624 -11,624 Book value, Dec 31 751,294 750,635 814,224

Stock and shares Acquisition cost, Jan 1 107 22,254 24,216 + Increase during financial year 200 200 29 - Decrease during financial year -1,991 Acquisition cost, Dec 31 307 22,454 22,254

TOTAL Acquisition cost, Jan 1 3,117,345 3,037,585 2,552,518 + Increase during financial year 278,810 233,216 487,812 - Decrease during financial year -57,280 -42,243 -2,745 Acquisition cost, Dec 31 3,338,875 3,228,558 3,037,585

- Accrued planned depreciation 1.1. -826,287 -826,287 -667,262 + Decrease in accrued planned depreciation 23,372 23,373 710 - Planned depreciation during financial year -180,816 -177,699 -174,339 - Additional depreciation due to scrapping -4,383 -4,383 - Depreciation on ground facilities -11,624 -11,624 Book value, Dec 31 2,339,137 2,231,938 2,196,694

6. Stock and shares No Book value Book value Book value FIM 1,000 FIM 1,000 FIM 1,000 Telephone shares 108 108 107

Subsidiary shares Kiinteistö Oy Lentäjäntie 1 10621 22,147 22,147 Change in numbe -7 10614 Finland Airport Services 20 200 200

Total stock and shares 308 22,455 22,254

7. CAA Group companies Ownership % Profit/loss 1994 Kiinteistö Oy Lentäjäntie 1 73,9 -3 056 Finland Airport Services 100

32 GROUP CAA 1994 1994 1993 FIM 1,000 FIM 1,000 FIM 1,000 8. Changes in equity capital Restricted equity Basic capital At the beginning of financial year 982,236 982,236 893,700 + increase/decrease 60,000 60,000 88,536 At the end of financial year 1,042,236 1,042,236 982,236

Non-restricted equity capital Other equity capital At the beginning of financial year 1,262,131 1,262,131 1,262,131 Loss/profit for previous financial year 48,631 51,365 52,696 Loss/profit for financial year 18,467 22,865 -1,331 At the end of financial year 1,329,229 1,336,361 1,313,496

CAPITAL TOTAL 2,371,465 2,378,597 2,295,732

GROUP CAA 1994 1994 1993 9. Reserves FIM 1,000 FIM 1,000 FIM 1,000 Optional reserves Transition reserve 12,827 12,827 12,827

Compulsory reserves 1,086 1,086

The transition reserve is the equivalent of the operational reserve for 1993. The compulsory reserve include claims for damages, which is booked under other expenditure in the income statement.

10. Appropriations from government budget Investments 55,612 55,612 66,207 Operations 16,825 16,825 17,266 Rescue services 3,978 3,978 3,570 Basic staff training 3,138 3,138 6,640 Development of air navigation services 1,514 Advances received 4,073 4,073 1,962 83,626 83,626 97,159

11. Personnel employed under government funding Number of staff 124 124 127 Wages and salaries paid 8,262 8,262 8,696

12. Pledges, mortgages and liabilities Subsidiaries Kiinteistö Oy Lentäjäntie 1 115,000 115,000

Guarantee as and for own debt on behalf of the subsidiary.

33 PROPOSAL ON THE USE OF THE PROFIT

The Board proposes that the Council of State approve the Income Statement and Balance Sheet and that the profit for the financial year of FIM 22.9 million is left in the Civil Aviation Administration´s profit and loss account.

Vantaa 24 March 1995

Mikko Talvitie

Samuli Haapasalo Mona Björklund

Vilho Hänninen Matti Puhakka

Pertti Yliniemi

The above financial Statement has been prepared in accordance with good accounting stand- ars. A separate audit report has been issued today

Vantaa 28 March 1995

Seppo Akselinmäki, JHTT Kalevi Alestalo Markku Pajunen, KHT Certified Public Accountant

34 AUDIT REPORT

We have examined the Income Statement and Balance Sheet, the books as well as the management and finances of the Civil Aviation Administration for the fiscal year 1995. The Income Statement and Balance Sheet drawn up by the Board and the managing director include the profit and loss account, balance sheet and appendices with financial statement of the Civil Aviation Group.

The auditing has been conducted to the extent stipulated by good auditing standards. The principles, contents and presentation concerning the bookkeeping and Income Statement and Balance Sheet have been investigated in order to ensure that there are no essential flaws or lack of information in the Annual Report. Also in a management audit the conformity to law of the activities of the managing director and the Board has been examined on the basis of the Act on State Enterprises.

The bookkeeping of the CAA has been properly arranged and the books have been kept in accordance with proper accounting practice. The control and management of funds have been properly arranged.

The Income Statement and Balance Sheet have been drawn up in compliance with the provi- sions in force and good accounting practice. The Financial Statements of the CAA and CAA Group together with the appended Annual Report to be supplied to the State render a truthful account of the finances of the CAA and the attainment of the targets set by the Parliament and the Council of State.

We recommend that – the Income Statement and Balance Sheet of the State Enterprise and the CAA Group be adopted – the proposal of the Board for the handling of the profit shown on the Balance Sheet be adopted.

Vantaa 28 March 1995

Seppo Akselinmäki, JHTT Kalevi Alestalo Markku Pajunen, KHT Certified Public Accountant

35 36 REGULATORY REGULATORY CONTROL

FUNCTIONS The Flight Safety Authority emphasized the importance of internal training and quality control in the production of air navigation services and manoeuvring area and ground traffic services. The requirements for air traffic controller licences and their renewal were tightened. In 1994, the most significant approvals of the Flight Safety Authority were granted to the Helsinki-Vantaa Airport ground traffic radar and to the first three ARWO weather obser- vation stations developed and manufactured by the The Flight Safety Authority is the regulatory division Telecommunications Maintenance Services divi- of the CAA, the purpose of which is to prepare avi- sion. The flight checks and measuring of air naviga- ation regulations, grant certificates and licences and tion equipment, made systematically to all the ANS oversee flight safety in general. The Flight Safety equipment on a regular basis, have showed that the Authority has final decision-making power in the equipment have remained in a good working order. CAA in matters concerning flight safety. The Flight Safety Authority is in charge of the regulatory control of the safety of air traffic, other aviation operations as well as airport and air navi- RENEWAL OF AVIATION ACT gation services. The rapid technical advancement of aircraft, Euro- pean integration development and increased inter- IMPACTS OF EEA MEMBERSHIP national co-operation are among the factors that necessitated the overall renewal of aviation laws in Finland. As a result a new Aviation Act (281/95) and The EEA Agreement which entered into force in Act on Major Accident Investigation (282/95) were 1994 brought about changes in the Flight Safety issued on March 3, 1995. The laws will be enforced Authority’s functions. For instance, Finnish citizen- with a separate ordinance in the beginning of 1996. ship being the obligatory requirement for obtaining In the Government proposal for the new law the air operator’s certificate was removed following the former citizenship requirements for certificate hold- new EEA regulations that forbid discrimination of ers have been relaxed for EEA citizens and compa- applicants on any ground. Another new feature is nies. Application procedures have been simplified that companies carrying passengers, goods and car- and means tests have been abandoned. The most go are required to have besides the air operator’s important licences are based on EEA ordinances. certificate also a special operating licence which The basic requirement for operation of commercial will allow the company to operate in the entire EEA. air services, the air operator’s certificate, will now be granted to all applicants meeting the agreed economic and technical-operational requirements. For AVIATION REGULATIONS transportation of passengers, post and cargo an additional operating licence is required. These licenc- In 1994, the Joint Aviation Authority (JAA), which es will be granted to all applicants fulfilling certain prepares Pan-European aviation regulations, issued economic requirements. In addition, the insurance new regulations concerning type-certification of requirements for aircraft will be tightened. various aviation equipment and approval of aircraft According to the Government proposal, the maintenance organizations. Fulfilling the require- competent authority for licensing airfields will pri- ments of the latter regulation has proved fairly de- marily be the CAA. All licences will be given on the manding for the smaller maintenance companies. basis of safety discretion. Airfields for operation with

37 LICENCES 1994 light aircraft can be taken into use by notifying the CAA. The CAA licences and certificates may be applied for after the necessary environmental permits Pri v ate flights 6086 are in order. The general arrangements for accident investigation as well as the planning, training, investigation procedures and setting up of investigating com- Air na vigation services 308 mittees will be transferred to the Accident Investiga- Engineering and maintenance 1153 tion Centre which acts under the Ministry of Commer cial a viation 1191 Justice.The inspection committees will be abandoned. The forthcoming Act includes new regulations on, e.g, data security of registers and on decreasing F LIGHT HOURS, AIRCRAFT REGISTERED IN FINLAND 1000 hours the harmful effects of aviation operations on the 350 environment. The sanctions concerning aviation li- 300 cences have been defined more closely. Of these 250 caution is one example. 200 The most important regulations are included in 150 the law. Others will be issued separately as ordi- 100 nances. Regulations on statutory level will be given

50 sparingly.

0 The Finnish aviation regulations are more and -84 -85 -86 -87 -88 -89 -90 -91 -91 -93 -94 2 % 6 % 7 % 7 % 1 3% 7 % 1 1% - 8% - 3% - 3% - 1% more frequently based on the Pan -European Joint

G ener al a v iation A ir T r a nsport G liding Aviation Regulations (JAR). The CAA participates actively in the work of the Joint Aviation Authorities, A IRCRAFT REGISTERED IN FINLANDthe co-operating organization of European aviation 1400 authorities. 1200

100 800 FLIGHT SAFETY 600

400 Flight safety in Finland maintained its high stand- 200 ards during 1994: no accidents, damage or injuries 0 occurred in air transport or commuter traffic. Gen- -84 -85 -86 -87 -88 -89 -90 -91 -91 -93 -94 eral aviation met with four accidents involving seri- Airliners Helicopters ous injuries to one person. Two glider-flying acci- Aeroplanes Gilders dents occurred with one person ending up injured. AIR OPERA T ORS CER TIFIC A TES 1994Two persons were killed in accidents occurring in parachuting. There was one accident with ultra light aircraft resulting in the death of one person. In 1994 two accidents occurred with foreign Multiengine 29 aircraft. A charter aircraft made an unsuccessful attempt to land at Kajaani Airport, which resulted in Sc heduled services 5 severe damage to the aircraft and light injuries to Others 3 three persons. In the crash of a general aviation aircraft near Oulu two lives were lost and one per- Helicopter 15 son was seriously injured. Single engine 64

38 39 IVALO

ENONTEKIÖ

KITTILÄ

SODANKYLÄ

ROVANIEMI

KUUSAMO CAA AIRPORTS KEMI–TORNIO

OTHER AIRPORTS

OULU

KAJAANI YLIVIESKA

KRUUNUPYY

VAASA KAUHAVA KUOPIO SEINÄJOKI JOENSUU

KAUHAJOKI JYVÄSKYLÄ VARKAUS

SAVONLINNA HALLI

TAMPERE– MIKKELI PIRKKALA PORI

LAPPEENRANTA

UTTI

HELSINKI– TURKU VANTAA

HELSINKI– MALMI MARIEHAMN

AIRPORTS 40 CIVIL AVIATION ADMINISTRATION Box 50 01531 VANTAA address: Ilmailutie 9, Vantaa telephone (exhange) (90) 82771 PAINATUSKESKUS OY, HELSINKI 1995 OY, PAINATUSKESKUS telex 121247 AVIA FI telefax (90) 8277 2099